There is pressure on governments worldwide to cut taxes to help the tourism industry, with a new study by UHY, the international accountancy network showing that Covid-driven cuts to tourism taxes have so far reduced a tourist’s typical daily spend on tax by just 1%, from 15% to 14%.

In its study covering 25 countries, UHY measured the tax paid on a number of everyday purchases by tourists – one night in a four-star hotel in a major tourist city (USD150), a meal for two in a restaurant (USD75) and a bottle of wine (USD30).

UHY’s study found that while the UK, Ireland, Germany and China have been quick to make significant tax cuts to aid the tourism industry, 21 of 25 countries in the study have not yet made any cuts. The firm says that governments should consider accelerating tax cuts to help their tourism economies.

Temporary cuts to Value Added Tax (VAT) and other sales taxes for the tourism industry during the pandemic have caused the UK’s average tax on typical tourist spending to reduce from 21.1% to just 7.8%. This saw the UK fall from the third-highest of 25 countries for tourist taxes pre-Covid, to 21^st today.

UHY says that there is significant scope for central and local governments around the world to stimulate demand for tourist businesses by cutting taxes on consumption, alcohol duties and local taxes in tourist cities.

Even in the countries that have cut taxes on tourism, extensions will almost certainly be needed until the sector begins to recover. The UK’s 5% VAT rate for the leisure and hospitality sector is set to expire and return to 20% at the end of March 2021, while China’s zero VAT rate ends on December 31 2020. Germany has already announced that its temporary 7% VAT rate will not return to its usual 19% until July 2021. Ireland has temporarily cut its VAT rate for hospitality and tourism businesses from 13.5% to 9% until December 2021.

The tourist industry has been among those worst-hit by Covid, with restrictions on travel set to continue for at least several more months. The International Civil Aviation Authority reported in May that the pandemic is likely to have reduced air passenger numbers by 1 billion by the end of September 2020. This has caused substantial knock-on effects for sectors including hotels, restaurants and visitor attractions.

Dennis Petri, Chair of UHY, says: “The tourism industry is critically important in a huge number of economies and many governments could do more to help it through one of the most difficult periods it has ever faced.”

“A few countries have done their level best to jump start their tourist economies, but tourism businesses worldwide are still crying out for assistance. With Covid still a major issue globally and travel restrictions set to stay in place for months yet, time is running out to help some of these businesses.”

“While normalising travel might not yet be possible for most countries, cutting the tax burden on tourism businesses could be done very quickly. Even where that has been done already, it will likely need to be extended.”

“This is not only a national government issue – local and regional governments could also do more to help. Many tourist cities levy specific taxes on hotel rooms and suspending those charges for a period would lift a little more of the burden from tourists and the hospitality industry.”

UHY says that Europe (11.3%) has lower taxes than the global average on tourism. Some European countries that rely relatively heavily on their tourism industries have among the lowest tourist taxes in UHY’s study, including Spain (10%) and France (11.6%).

Cuts to tourism taxes have reduced tax from 15% to 14% of a tourist’s typical daily spend

Notes for Editors

UHY global press contact: Leigh Lyons on +44 20 7767 2624

Email: l.lyons@uhy.com – www.uhy.com

Nick Mattison or Richard Crossan

Mattison Public Relations

+44 20 7645 3631

+44 74 4637 5555

Email: richard.crossan@mattison.co.uk

About UHY

Established in 1986 and based in London, UK, UHY is a leading network of independent audit, accounting, tax and consulting firms with offices in over 330 major business centres across 100 countries.

Our staff members, over 8,500 strong, are proud to be part of the 17th largest international accounting and consultancy network. Each member of UHY is a legally separate and independent firm. For further information on UHY please go to www.uhy.com.

UHY is a member of the Forum of Firms, an association of international networks of accounting firms. For additional information on the Forum of Firms, visit www.forumoffirms.org

The average tax paid by individuals around the world when purchasing a new home has now reached almost 5%, with some major economies charging more than 10% shows a new study by UHY, the international accountancy network.

UHY’s study shows that the average tax charged worldwide on the purchase of a home worth USD150,000 has now reached 4.51% – a cost of USD6,771 even for a relatively modest home (see table below).

The average tax paid on a home purchase has risen quickly in recent years. A previous study of property taxes by UHY, in 2013, found that G7 countries charged an average of 2.29% tax on the purchase of a home worth USD150,000. This has now risen to an average of 3.57% in 2020.

The study also shows that several major developed economies now charge tax worth more than 10% on the purchase of a home worth USD150,000, including Spain (14.85%), Belgium (11.66%) and Japan (11%).

However, the impact of coronavirus on property prices worldwide may force more countries to make emergency cuts to taxes on housing purchases to keep property transactions moving. The UK was recently forced to make a temporary cut to property transaction taxes in an attempt to revive the market.

UHY says that more countries could now look at making similar cuts, especially if the UK’s reforms prove successful in reviving the market.

UHY says that property transaction taxes are often seen by Governments as an attractive tax to cut when seeking economic stimulus. While they make up a relatively small proportion of overall tax receipts compared to major taxes like income tax and VAT, residential property transactions create broader economic activity such as spending on refurbishment and white goods when people move home.

UHY says that in the longer term the cost to Governments worldwide of the coronavirus pandemic could result in pressure to increase property taxes. A combination of lower tax revenues and expensive economic stimulus measures will leave many countries with major budget deficits that will need to be addressed.

It adds that while increasing property taxes may be an attractive source of revenue for governments, discouraging property purchases can reduce labour market mobility as there will be a tax charge each time a property owner moves and buys a new home.

High property taxes can also distort the market by discouraging older homeowners from downsizing as this would result in a tax charge on the purchase of their new smaller home. Some commentators have also argued that high property taxes disincentivise homeowners from selling properties when housing markets overheat and buying again once prices have fallen. This removes a key mechanism for preventing property bubbles forming.

Dennis Petri, Chairman of UHY International, says: “Taxing property purchases is one way to increase tax receipts to address the costs of coronavirus. However, that could hit ordinary people the hardest on what is likely to be the biggest investment they will ever make.”

“It has been argued that raising property taxes helps to deflate property bubbles, but their track record in doing that is patchy at best. They also make it more difficult for people to move to areas where their skills are more in demand, impacting economic productivity.”

UHY tax professionals studied tax data for individuals purchasing a house worth USD150,000, USD1 million and USD2 million in 27 countries across its international network, including all members of the G7, as well as key emerging economies.

Spain, Belgium and Japan all tax a USD150,000 purchase over 10%

UHY’s findings show that Spain is the developed economy with the highest levels of taxation on property purchases, levying 14.85% on a purchase of a property worth USD150,000, and 13% on properties worth USD1 million and USD2 million.

While the Spanish government has set the national rate of property transfer tax at 7%, many provinces have much higher rates – up to 11% in some cases. When Stamp Duty and other local taxes are added, the overall tax bill can be close to 15% in some regions.

Belgium is the second-highest developed economy for property taxes in UHY’s study, averaging 11.66% nationwide – although homebuyers in Brussels and Wallonia pay even more, at 12.5%. Japan also levies very high property transfer taxes, applying its 8% consumption tax (equivalent to VAT) on all residential property purchases. This is in addition to a real estate acquisition tax of 3%.

UK targets tax at higher-value home purchases

UHY’s study shows that since the Chancellor raised the Stamp Duty threshold in the Summer Budget, a homebuyer in the UK pays just USD19,300 in Stamp Duty on a purchase of a home worth USD1 million, compared with a European average of USD45,294 (see table below). The effective Stamp Duty rate was 3% before the emergency cuts.

The cut to Stamp Duty, which will last until the end of March 2021, is aimed at stimulating the residential property market following a sharp drop in transactions during the coronavirus outbreak.

UHY explains that although the Stamp Duty cut will help ordinary people buying lower-value properties, it does leave buyers of properties worth USD 2 million and up paying more tax in the UK than in most other countries. Homebuyers of a property worth USD 2 million still pay 5.78% in Stamp Duty, putting the UK ahead of Germany (5.38%) and Italy (0.63%) and an average for the US of 0.39%.

“The newly announced cut to Stamp Duty is an encouraging sign for the housing market and should boost property purchases and the associated economic activity.” Says Andrew Snowdon, Partner and Head of Tax at UHY Hacker Young in the UK.

United States among the most generous to USD2 million homebuyers

UHY’s study shows that rates of tax on a purchase of a home worth USD2 million across the United States average just 0.39%, while Russia levy no tax at all on purchases of residential property, regardless of value.

Italy also charges less than 1% tax on the purchase of a USD2 million home. These figures are far lower than the average rate charged in G7 countries (4.49%) or in the BRICs economies (3.56%).

UHY explains that low property taxes can act as a significant attraction for high net worth individuals, ensuring that key creators of employment, especially in emerging economies like Russia, are less likely to move overseas.

Nikolay Litvinov, Director of Audit and Consulting at UHY Yans-Audit in Russia, says: “Russian property buyers continue to benefit from the most buyer-friendly tax regime in the world. That goes for both ordinary families buying their first home, and for high net worth individuals purchasing luxury property.”

All 27 countries ranked by the amount and the percentage of tax paid on a purchase of a USD150,000 property – Spain, Bangladesh, Belgium and Japan all above 10%

All 27 countries ranked by the amount and the percentage of tax paid on a purchase of a USD1 million property – UK Stamp Duty regime much tougher on USD1 million purchases

All 27 countries ranked by the amount and the percentage of tax paid on a purchase of a USD2 million property – USD2 million homebuyers in the US pay virtually zero tax

Notes for Editors

UHY global press contact: Leigh Lyons on +44 20 7767 2624

Email: l.lyons@uhy.com – www.uhy.com

Nick Mattison or Richard Crossan

Mattison Public Relations

+44 20 7645 3631

+44 74 4637 5555

Email: richard.crossan@mattison.co.uk

About UHY

Established in 1986 and based in London, UK, UHY is a leading network of independent audit, accounting, tax and consulting firms with offices in over 330 major business centres across 100 countries.

Our staff members, over 8,500 strong, are proud to be part of the 17th largest international accounting and consultancy network. Each member of UHY is a legally separate and independent firm. For further information on UHY please go to www.uhy.com.

UHY is a member of the Forum of Firms, an association of international networks of accounting firms. For additional information on the Forum of Firms, visit www.forumoffirms.org

New member firm in Nicaragua joins UHY network

We welcome Morales, Tellez & Asociados CÍa Ltda, our new member firm in Nicaragua, to the global accountancy network UHY, extending our coverage within the Central Americas region. The firm is in the process of adopting the UHY branding and will soon be known as UHY Auditores & Consultores.

The firm was established in 2012 as an accounting and consulting firm and is based in Managua, Nicaragua, the largest country in Central America. As part of the growth strategy of Morales, Tellez & Asociados CÍa Ltda, the partners are developing their offering throughout Central America in collaboration with UHY Pérez (Guatemala), a member of UHY since 2008.

Morales, Tellez & Asociados CÍa Ltda has four partners and eleven other professional and administrative staff. The firm’s managing partner is Omar Pérez and the senior partner is Mario Tellez who alongside the other partners is a licenced accountant.

Managing partner Omar Pérez comments: “The global UHY network has over 8,200 colleagues sharing expertise and knowledge for the benefit of clients and these combined resources strengthen the offering of Morales, Tellez & Asociados CÍa Ltda. We look forward to a successful cooperation together with UHY Pérez (Guatemala) and across the global UHY network to help our clients operate more efficiently in a competitive marketplace”.

The firm offers a full range of services include Administration, Management Consulting, Finance, Accounting, Tax Consulting, Human Resources and Auditing. Morales, Tellez & Asociados CÍa Ltda operates across many sectors, specialising in the Pharmaceutical, Shipping, Retail, Technology and Manufacturing sectors and has a client base that includes Costa Rica, Panama, Guatemala, Colombia and Honduras.

Dennis Petri, chairman of UHY comments: “Nicaragua’s economic resources offer many opportunities.  Examples include its exports such as clothing, coffee, beef, sugar as well as light manufacturing.  We are delighted to welcome Morales, Tellez & Asociados CÍa Ltda to the UHY network; the firm extends our coverage and capabilities to serve clients in Nicaragua, across Central America and internationally”.

UHY liaison office for  Morales, Tellez & Asociados CÍa Ltda  

Contact Omar Pérez, Managing Partner on +502 2503 5900  operez@uhy-perez.com  

W: www.uhy-perez.com

 UHY global press contact: Leigh Lyons, marketing & business development manager, on +44 20 7767 2624  l.lyons@uhy.com – www.uhy.com

New member firm in Kuwait joins UHY network

We welcome Pillars Advisory, our new member firm in Kuwait, to the global accountancy network UHY, strengthening our representation in the Middle East.  The firm has adopted the UHY branding and will be known as UHY Pillars with UHY Pillars Advisory as the full member firm and UHY Pillars Audit as its affiliate.

Pillars Advisory has both local and international clients across many sectors in over 20 countries with the top five sectors being real estate, non-profit, retail, services and contracting. The firm initially offered consultancy and accountancy reviews services but now also offers assurance services.

Managing partner Wael Arafa comments “Being part of the UHY global network underpins our commitment to deliver quality services and enhances the services and advice we can offer our clients.  The global presence of the network combined with the expertise and knowledge shared among UHY’s 8,200 colleagues around the world strengthens our own market position, locally and internationally and will be of great value to our current and potential clients and their operations.”

Dennis Petri, chairman of UHY comments: “We are delighted to welcome Pillars Advisory and its affiliate firm Pillars Audit to the UHY network. The addition to our network of the two firms extends our coverage and capabilities in the Middle East. Kuwait has huge reserves of natural resources, a strategic location in the Persian Gulf and is part of the implementation of Gulf Gateway projects.”

UHY liaison office for Pillars Advisory

Contact Wael Arafa, Managing Partner on 965 966 26 663  wael@pillarsadvisory.com

W: www.pillarsadvisory.com

UHY global press contact: Leigh Lyons, marketing & business development manager, on +44 20 7767 2624  l.lyons@uhy.com – www.uhy.com

New member firm in Dubai joins UHY network

We welcome UHY James Chartered Accountants, our new member firm in Dubai, United Arab Emirates (UAE) to the global accountancy network UHY, extending our coverage within the Middle East.

UHY James Chartered Accountants, with a total headcount of 77 and five partners, brings wide-ranging experience in audit, advisory, corporate finance, tax and management consultancy services to a portfolio of domestic and international clients across a number of sectors including healthcare, manufacturing, trading, contracting and real estate.

Managing partner, James Mathew comments: “Being part of the UHY global network underpins our commitment to deliver quality services and enhances the services and advice we can offer our clients. The global presence of the network combined with the expertise and knowledge shared among UHY’s 8,200 colleagues around the world, not only strengthens our own capabilities, locally and internationally, but also those of our current and potential clients and their operations. We are  joining the UHY network at one of the most exciting times in the history of the UAE as Dubai gets ready to host the Expo 2020. We anticipate managing an increased demand for our services as the business environment continues to focus on economic diversification, promoting the UAE as a global trade and tourism hub.”

Dennis Petri, chairman of UHY comments: “We are delighted to welcome James Mathew Chartered Accountants to the UHY network, extending our coverage and capabilities in Dubai and the wider UAE.   The UAE is one of the Middle East’s most important economic centres and the firm is well placed to serve our international clients who have business interests in this country and the wider region.”

UHY liaison office for UHY James Chartered Accountants

Contact: James Mathew, Managing Partner +971 4 2770606 james.mathew@uhy-ae.com W: uhy-ae.com

Notes for Editors

UHY global press contact: Leigh Lyons, marketing & business development manager, on +44 20 7767 2624, l.lyons@uhy.com W: www.uhy.com